Vmware Inc (VMW)
US9285634021 - Common Stock
We assign a fundamental rating of 5 out of 10 to VMW. VMW was compared to 276 industry peers in the Software industry. While VMW belongs to the best of the industry regarding profitability, there are concerns on its financial health. VMW is not valued too expensively and it also shows a decent growth rate.
1. Profitability
1.1 Basic Checks
In the past year VMW was profitable.
VMW had a positive operating cash flow in the past year.
Each year in the past 5 years VMW has been profitable.
VMW had a positive operating cash flow in each of the past 5 years.
1.2 Ratios
With an excellent Return On Assets value of 4.43%, VMW belongs to the best of the industry, outperforming 82.92% of the companies in the same industry.
The Return On Equity of VMW (55.99%) is better than 97.86% of its industry peers.
Looking at the Return On Invested Capital, with a value of 7.86%, VMW belongs to the top of the industry, outperforming 85.05% of the companies in the same industry.
Measured over the past 3 years, the Average Return On Invested Capital for VMW is in line with the industry average of 10.12%.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 4.43% | ||
| ROE | 55.99% | ||
| ROIC | 7.86% |
ROA(3y)5.88%
ROA(5y)10.66%
ROE(3y)N/A
ROE(5y)N/A
ROIC(3y)9.4%
ROIC(5y)10.41%
1.3 Margins
VMW has a better Profit Margin (10.48%) than 84.70% of its industry peers.
VMW's Profit Margin has improved in the last couple of years.
Looking at the Operating Margin, with a value of 14.00%, VMW belongs to the top of the industry, outperforming 84.70% of the companies in the same industry.
In the last couple of years the Operating Margin of VMW has declined.
VMW's Gross Margin of 81.19% is amongst the best of the industry. VMW outperforms 86.83% of its industry peers.
VMW's Gross Margin has been stable in the last couple of years.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 14% | ||
| PM (TTM) | 10.48% | ||
| GM | 81.19% |
OM growth 3Y2.65%
OM growth 5Y-7.92%
PM growth 3Y-45.05%
PM growth 5Y3.26%
GM growth 3Y-0.79%
GM growth 5Y-0.97%
2. Health
2.1 Basic Checks
VMW has a Return on Invested Capital (ROIC), which is below the Cost of Capital (WACC), which means it is destroying value.
Compared to 1 year ago, VMW has more shares outstanding
VMW has more shares outstanding than it did 5 years ago.
VMW has a better debt/assets ratio than last year.
2.2 Solvency
An Altman-Z score of 1.85 indicates that VMW is not a great score, but indicates only limited risk for bankruptcy at the moment.
VMW has a Altman-Z score of 1.85. This is comparable to the rest of the industry: VMW outperforms 48.40% of its industry peers.
The Debt to FCF ratio of VMW is 2.25, which is a good value as it means it would take VMW, 2.25 years of fcf income to pay off all of its debts.
VMW has a Debt to FCF ratio of 2.25. This is in the better half of the industry: VMW outperforms 73.67% of its industry peers.
A Debt/Equity ratio of 3.73 is on the high side and indicates that VMW has dependencies on debt financing.
VMW has a Debt to Equity ratio of 3.73. This is amonst the worse of the industry: VMW underperforms 87.19% of its industry peers.
Even though the debt/equity ratio score it not favorable for VMW, it has very limited outstanding debt, so we won't put too much weight on the DE evaluation.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 3.73 | ||
| Debt/FCF | 2.25 | ||
| Altman-Z | 1.85 |
ROIC/WACC0.77
WACC10.18%
2.3 Liquidity
VMW has a Current Ratio of 0.87. This is a bad value and indicates that VMW is not financially healthy enough and could expect problems in meeting its short term obligations.
Looking at the Current ratio, with a value of 0.87, VMW is doing worse than 82.56% of the companies in the same industry.
A Quick Ratio of 0.87 indicates that VMW may have some problems paying its short term obligations.
VMW's Quick ratio of 0.87 is on the low side compared to the rest of the industry. VMW is outperformed by 81.49% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 0.87 | ||
| Quick Ratio | 0.87 |
3. Growth
3.1 Past
The Earnings Per Share has been growing slightly by 3.90% over the past year.
Measured over the past 5 years, VMW shows a small growth in Earnings Per Share. The EPS has been growing by 4.63% on average per year.
Looking at the last year, VMW shows a small growth in Revenue. The Revenue has grown by 3.56% in the last year.
Measured over the past years, VMW shows a quite strong growth in Revenue. The Revenue has been growing by 11.17% on average per year.
EPS 1Y (TTM)3.9%
EPS 3Y0.31%
EPS 5Y4.63%
EPS growth Q2Q11.59%
Revenue 1Y (TTM)3.56%
Revenue growth 3Y7.28%
Revenue growth 5Y11.17%
Revenue growth Q2Q2.16%
3.2 Future
Based on estimates for the next years, VMW will show a small growth in Earnings Per Share. The EPS will grow by 7.04% on average per year.
Based on estimates for the next years, VMW will show a quite strong growth in Revenue. The Revenue will grow by 8.40% on average per year.
EPS Next Y9.9%
EPS Next 2Y12.07%
EPS Next 3Y8.72%
EPS Next 5Y7.04%
Revenue Next Year4.52%
Revenue Next 2Y5.39%
Revenue Next 3Y5.55%
Revenue Next 5Y8.4%
3.3 Evolution
When comparing the EPS growth rate of the last years to the growth rate of the upcoming years, we see that the growth is accelerating.
The Revenue growth rate is decreasing: in the next years the growth will be less than in the last years.
4. Valuation
4.1 Price/Earnings Ratio
Based on the Price/Earnings ratio of 20.59, the valuation of VMW can be described as rather expensive.
85.77% of the companies in the same industry are more expensive than VMW, based on the Price/Earnings ratio.
The average S&P500 Price/Earnings ratio is at 24.95. VMW is around the same levels.
VMW is valuated rather expensively with a Price/Forward Earnings ratio of 17.40.
Based on the Price/Forward Earnings ratio, VMW is valued cheaper than 85.41% of the companies in the same industry.
VMW's Price/Forward Earnings ratio indicates a similar valuation than the S&P500 average which is at 21.40.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 20.59 | ||
| Fwd PE | 17.4 |
4.2 Price Multiples
Based on the Enterprise Value to EBITDA ratio, VMW is valued cheaply inside the industry as 85.41% of the companies are valued more expensively.
Compared to the rest of the industry, the Price/Free Cash Flow ratio of VMW indicates a rather cheap valuation: VMW is cheaper than 92.53% of the companies listed in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 13.2 | ||
| EV/EBITDA | 20.29 |
4.3 Compensation for Growth
The high PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates an expensive valuation of the company.
VMW has an outstanding profitability rating, which may justify a higher PE ratio.
PEG (NY)2.08
PEG (5Y)4.45
EPS Next 2Y12.07%
EPS Next 3Y8.72%
5. Dividend
5.1 Amount
No dividends for VMW!.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | N/A |
Vmware Inc
NYSE:VMW (11/21/2023, 7:04:00 PM)
Premarket: 143 +0.52 (+0.36%)142.48
-7.43 (-4.96%)
Chartmill FA Rating
GICS SectorInformation Technology
GICS IndustryGroupSoftware & Services
GICS IndustrySoftware
Earnings (Last)
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Market Cap61.52B
Analysts
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| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | N/A |
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Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 20.59 | ||
| Fwd PE | 17.4 | ||
| P/S | |||
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| P/tB | |||
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PEG (NY)2.08
PEG (5Y)4.45
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 4.43% | ||
| ROE | 55.99% | ||
| ROCE | |||
| ROIC | |||
| ROICexc | |||
| ROICexgc | |||
| OM | 14% | ||
| PM (TTM) | 10.48% | ||
| GM | 81.19% | ||
| FCFM |
ROA(3y)
ROA(5y)
ROE(3y)
ROE(5y)
ROIC(3y)
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F-Score
Asset Turnover0.42
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 3.73 | ||
| Debt/FCF | |||
| Debt/EBITDA | |||
| Cap/Depr | |||
| Cap/Sales | |||
| Interest Coverage | |||
| Cash Conversion | |||
| Profit Quality | |||
| Current Ratio | 0.87 | ||
| Quick Ratio | 0.87 | ||
| Altman-Z |
F-Score
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Cap/Depr(3y)
Cap/Depr(5y)
Cap/Sales(3y)
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Growth
EPS 1Y (TTM)3.9%
EPS 3Y0.31%
EPS 5Y
EPS growth Q2Q
EPS Next Y9.9%
EPS Next 2Y
EPS Next 3Y
EPS Next 5Y
Revenue 1Y (TTM)3.56%
Revenue growth 3Y7.28%
Revenue growth 5Y
Revenue growth Q2Q
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